Shares in troubled UK construction and services giant Interserve rose nearly 30% today after it said it had agreed a plan with lenders to cut its net debt by at least half, to £275m, in a debt-for-equity swap.
But a major shareholder has called on the company sack the entire board, bar chief executive Debbie White (pictured).
Profitable unit RMD Kwikform arm will not be sold off, as had previously been considered, and it will shoulder £350m of its parent’s debt.
The agreement, which looks set to stave off a Carillion-style collapse, will see Interserve issue £480m of new shares to creditors.
As well as taking on shares, lenders will also provide £75m through a new debt facility, with a maturity of 2022.
The deal gives lenders ownership of 97.5% of Interserve’s ordinary share capital, which will be "subject to claw back in full by existing Interserve shareholders through a fully pre-emptive open offer", the company said.
White called the plan "a significant step forward in our plans to strengthen the balance sheet".
It is subject to approval of shareholders, but the company said it is preparing "alternative plans to ensure the proposed transaction can be implemented in the event that shareholder approval is not forthcoming".
Debbie White said: "This proposal has been achieved following a long period of intensive negotiation and has the support of our financial stakeholders and government. Its successful implementation is critical to the Interserve Group’s future and all of its stakeholders."
Hit by problems on energy-from-waste contracts, Interserve’s debt has soared in recent years, and its share value has plummeted. It has a market value of around £17m, down from £500m in 2017.
Shares surged from around 11p to 15p on the news this morning.
There was a sour note, however, when Interserve notified the London Stock Exchange that one of its major shareholders, Coltrane Master Fund, had called for eight of the company’s directors to be removed.Â
In a letter to the board, the fund said it wanted a general meeting, and proposed the dismissal of chairman Glyn Barker, chief financial officer Mark Whiteling, executive director Dougie Sutherland, and non-executive directors Russell King, Anne Fahy, Nick Salmon, Gareth Edwards, and Nicholas Pollard.
The fund, which owns more than 5% of Interserve’s paid-up capital, proposed the appointment of David C.L. Frauman, managing director of Steinhoff Finance Holding, and Stuart Ross as directors.
Interserve said it was consulting with its advisers and will update its shareholders about the timing of its general meeting to consider the matters "in due course".
Image: Interserve chief executive Debbie White (Interserve)